Home > Blogs > New York > New York County > New York > Would you marry your spouse if you didn't know about their financials

NYC Real Estate Lawyer Blog

By Daniel Gershburg, Esq. | Real Estate Pro in New York, NY

Would you marry your spouse if you didn't know about their financials

Serious Question:  Would you marry your spouse if you didn't know about their financial well being?  If you didn't know whether or not they were in debt?  If you didn't know whether or not they had a savings account in case *something* happened?  The answer, likely, is no.  Why?  Because you want to know what you're getting into.  Totally normal.  Because you want to make sure they won't be spending a ton out of your own pocket to support someone who is having serious financial difficulties (unless that's your thing-in which case contact me because I can play matchmaker).  In any event, you likely realize, at one time or another, that knowing what you're getting into, financially speaking, is incredibly important when you're about to commit to something.  Which brings me-obviously- to the co-op.

The Market is hot again, folks.  People buying and getting involved in bidding wars in the same way that they did in 2006 (you remember 2006, right?)  Anyway, what I'm finding more and more when I represent purchasers is this kind of "whatever" attitude on the part of co-ops when disclosing or discussing their financials.  You see, when you buy a co-op, you're actually buying shares in a company.  And, like marriage, or a company you're investing in, you want to know the condition of the investment at the time you go in.  The financials of the co-op are just that.  They tell you whether or not the co-op is in good health, financially speaking.  If the co-op is showing year over year deficits, that means something's not right.  If the co-op;s reserve fund (in the financials) keeps shrinking, that means there are likely assessments in increases in maintenance on the way.  But the problem is when the market gets hot, no one seems to care anymore.  I can't tell you how many deals clients have entered into, even though the financials don't look great.  I also can't tell you how many times brokers have simply shrugged when I told them I can't get the proper info I need from the management company for the co-op.  This information is so crucial and yet so discounted when everyone gets into a buying frenzy. 

Imagine a situation where you buy a co-op for $500,000.00 because your budget allows for that.  But it doesn't allow for much more.  You're super excited because after months and months of looking, you've finally found a place you can afford AND that has a window that faces the water (in your dreams).  Anyway, you've put together the numbers and you can just get by with the mortgage payment as well as maintenace.  Now imagine the co-op doesn't have great board minutes and their financials show that their reserve fund is shrinking.  No mention of repairs needed.  When your lawyer asks the broker and the management company about this, he gets the same "shrug."  "Look, pal, you either want this place or you don't.  I have 6 other offers on this.  The market is hot."  Your temptation, as a buyer, would be to purchase.  But that's the wrong move.  If the co-op is not willing to disclose the appropriate documents, or, more likely, if those documents don't allow you to decipher whether or not this is a building that is sound financially (where you wont have to pay assessment after assessment every year), then you may want to move on.  Again, when the market gets hot like this, people's behavior tends to change.  They become more impulsive.  If that happens to you, take a deep breadth, and step back.  The financials of the building where you see yourself living for years and years are more important than your desire to get a deal now!  Make sure you're able to figure out what it is you're getting into.  Because you can't divorce a co-op.  


By fanny montalvo,  Tue Jul 23 2013, 14:41
Great 'Suze Orman-ish' advise for anyone heading towards any 'altar'!
By Daniel Gershburg, Esq.,  Tue Jul 23 2013, 14:53
Ha! Thank you, Fanny!

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer